Anchor Hanover Group (201916021)

REPORT

COMPLAINT 201916021

Anchor Hanover Group

15 December 2020

Our approach

The Housing Ombudsman’s approach to investigating and determining complaints is to decide what is fair in all the circumstances of the case. This is set out in the Housing Act 1996 and the Housing Ombudsman Scheme. The Ombudsman considers the evidence and looks to see if there has been any ‘maladministration’, for example whether the landlord has failed to keep to the law, followed proper procedure, followed good practice or behaved in a reasonable and competent manner.

Both the resident and the landlord have submitted information to the Ombudsman and this has been carefully considered. Their accounts of what has happened are summarised below. This report is not an exhaustive description of all the events that have occurred in relation to this case, but an outline of the key issues as a background to the investigation’s findings.

The complaint

The resident complains that the landlord:
1. did not inspect her property prior to her purchasing
2. did not maintain and paint the external surfaces of the building
3. did not respond to her requests for details on finances
4. has plans to repaint windows and then shortly after replace them
5. has plans to build a boundary wall.

Jurisdiction

What we can and cannot consider is called the Ombudsman’s jurisdiction. This is governed by the Housing Ombudsman Scheme (the Scheme). When a complaint is brought to the Ombudsman, we must consider all the circumstances of the case as there are sometimes reasons why a complaint will not be investigated.

Paragraph 39(i) of the Scheme states that this Service will not consider matters where the Ombudsman considers it quicker, fairer, more reasonable or more effective to seek a remedy through the courts, a designated person, other tribunal or procedure. As part of her complaint about the landlord not inspecting the property, the resident states that the terms of the previous leaseholder’s lease agreement set out that they should keep the property in a good state of repair, and believes that the landlord should have enforced this covenant. She also cites the surrender clause of the lease in support of her argument that the landlord should inspect leasehold properties.

The Ombudsman does not have the authority to compel a landlord to take action to enforce the provisions of another resident’s lease, or to give a binding determination as to the landlord’s obligations under the terms of a lease. This would be best achieved by an application to the First Tier Tribunal – Property Chamber (FTT) which has the authority and expertise to reach a decision and make orders that will be legally binding on the parties. In light of this, these aspects of the complaint are outside the Ombudsman’s jurisdiction, in accordance with paragraph 39(i) of the Scheme.

In relation to the complaint about historic neglect, the resident has expressed concerns that leaseholders will be financially penalised for this. She has asked that the Ombudsman arbitrate over which costs should borne by the reserve fund and which are due to historic neglect and therefore should be paid by the landlord. She said she wants it recognised that leaseholders have paid management fees and not received commensurate professionally competent services, and would like the Ombudsman to rule that a refund is due.

Matters concerning the reasonableness of and liability to pay a service charge (including major works and management charges) are also more properly deal with by the FTT, which can make determinations on all aspects of the liability to pay a service charge, including by whom, to who, how much and when a service charge is payable. In order to decide liability, the FTT also decides whether service charge costs have been reasonably incurred and if so whether the standard of any services or works for which the costs are charged is reasonable. The FTT is better placed than the Ombudsman to examine service charge accounts in detail. Therefore, this investigation will not be addressing these aspects of the complaint in line with paragraph 39(i) of the Scheme.

This Service’s investigation of the complaint will, however, consider whether the landlord took reasonable and appropriate steps to investigate and respond to the concerns the resident raised, including whether it gave its obligations sufficient consideration and provided a clear explanation of its position to the resident.

Regarding the complaints about repainting of windows and the boundary wall, these are not matters that formed part of the complaint put to and considered by the landlord via its formal complaint process, and therefore will not be addressed in this investigation. This is in line with paragraph 39(a) of the Scheme, which states that this Service will not consider complaints made prior to having exhausted a member’s complaints procedure.

Background and Summary of events

The resident purchased the property in September 2019, and reported issues with the French doors to the landlord soon after, submitting a report from a contractor she employed that set out that these were ‘…rotten and no longer prevent rain-water from entering the lounge.’ The landlord sent its own surveyor to review the doors in December 2019, and their report stated that these were affected by wet rot. The surveyor recommended that the doors be replaced. On 24 December 2019 the landlord emailed the resident acknowledging the recommendation to replace the doors, but said ‘We have had a number of other issues raised on the estate about window repairs so will need to gather more information about replacement and how best to proceed and be cost effective with this…Because of the committed spending of the reserve fund it is best we replace/mend the effected windows in one go to achieve value for money for the residents...’

On 13 January 2020 the resident emailed the landlord setting out her concerns that the landlord had not specified a date for painting the exterior of the building, which had not been done since 2009. She said that she had been promised a copy of a schedule of outstanding and planned works in preparation for the estate budget meeting that had taken place in October 2019, but this had not been provided. She also said that she had no way of knowing when the landlord intended to replace the French windows, which the surveyor had confirmed had rotted.

The resident submitted a formal complaint on 12 February 2020. She summarised her complaint to be about ‘…a tradition of historic neglect.’ The resident went into further detail about her concerns, pointing out that the lease held by the previous lessee set out that they must redecorate every seven years and keep the interior of the premises in good repair. The landlord had the right within the terms of the lease to inspect each flat to ensure that the building as a whole was well maintained and safe. However, the resident was aware that the landlord had not done so, and said that the landlord was ‘…negligent in its duty to maintain the condition of each flat and in so doing, preserve the safety and integrity of the building as a whole.’ The resident explained that she knew this because she had an electrical inspection carried out by a qualified electrician, who found faults in the wiring leaving her with a bill for over £2,000 for remedial works, assessed as ‘urgently needed.’

The resident said that the landlord had failed to maintain and paint the external surfaces of the estate since 2009. She said ‘Because of the subsequent failure to maintain the woodwork and ironwork, we now have rotten window frames all over the estate.’ The resident complained that money was being wasted on temporary fixes because regular maintenance inspections had not been done. The resident complained that she had requested that the Regional Manager provide a spreadsheet showing the planned works for the next five years, but this had not happened. She had also asked for a schedule of outstanding repairs for the estate, but this had not been provided either.

The landlord responded on 6 March 2020. In relation to the condition of the flat the landlord stated that under the terms of the lease, homeowners were responsible for the wiring within the property and therefore it was unable to take any responsibility for this. While the resident was correct in pointing out that the lease said that a leaseholder should redecorate every seven years and keep the property in good repair, this was not a clause that the landlord enforced. It said ‘It is the purchaser’s decision if the property is in the condition they wish to purchase or whether they intend to carry out works to bring the property into a condition that is acceptable to them… As we discussed, the property was sold at a reduced price and this condition of the property would have been taken into consideration when agreeing a sale price.’ The landlord confirmed that it did not carry out safety inspections of leasehold properties.

The landlord went on to acknowledge that external decoration had been delayed due to ‘…changes within the business and the procurement of planned works…’ and ‘the mobilisation of the contract.’ But it could confirm that these works were due to be carried out in the next financial year. As part of the external decorations, the contractors would be instructed to carry out any repairs that were necessary. The windows were due for replacement in 2023/24 and until then any necessary repairs would be completed. The landlord said that it was unaware of any widespread issue or concerns with windows and no other complaints had been received from other residents.

With regards to the request for a list of outstanding repairs, the landlord said that repairs were ordered as and when they were identified. Depending on the urgency of the works, repairs may take up to four weeks to complete.

On 7 March 2020 the resident emailed the landlord asking, in light of the comments made in its 6 March 2020 letter, to see the 5 year projected spending budget.

The resident also made a request for clarification on the matter of planned works. In response to this the landlord emailed her on 13 March 2020 stating that there were a number of issues that needed to be addressed before window replacement was completed. Some of these issues would be addressed during the decoration works, and more urgent matters would be addressed sooner. The landlord said that if the resident was dissatisfied with the response to her complaint, she could escalate this by contacting the customer relations team.

The resident emailed the landlord on 14 March 2020 saying she felt that her complaint had already reached the second level, explaining that she had been complaining to the Area and Regional Estate Managers since October 2019. She said that her complaint ‘…had been bandied about within the organisation for 5 months now.’ The resident said that the stage one response had failed to address her complaint about historic neglect, and reiterated that the main building had not been painted since 2009. The resident asked for a plain English translation of the landlord’s 13 March 2020 email comment ‘we … have a number of issues that need to be addressed before the window replacement is completed.’ The resident expressed concern that the landlord did not hold clear budgetary information and felt this showed that the organisation was not professionally managed. She concluded ‘[the stage one letter] has not answered my complaint to give me any reassurance that the organisation can meet its obligations and I will be putting through my complaint to the Housing Ombudsman.’

The landlord acknowledged this on 25 March 2020 and said it would aim to respond within 14 calendar days, although given the coronavirus situation it may take longer. It seems that no response was then provided, as on 23 April 2020 the landlord offered the resident sincere apologies for any breakdown in communication that had occurred in relation to the complaint, and said that it would ensure all of the resident’s concerns and queries were responded to fully and thoroughly, and would be back in touch as soon as possible.
On 28 April 2020 the landlord sent out initial Section 20 consultation process letters regarding external works.

On 7 May 2020 the resident emailed the landlord with a request to escalate the complaint to the next stage of the formal complaints process. She said it had been 8 weeks since she asked for clarification of the stage one response, but this had not been provided. She said she was not satisfied with the response because it:

21.1 Dismissed faults including potentially dangerous electrics in the property as being her responsibility to detect as a potential buyer.

21.2 Ignored her point that under the lease surrender process the landlord stipulated that the flat must be in tenantable condition: but as it did not inspect the properties, it was possible to surrender a lease regardless of the flat’s condition. She said that it was ‘…a matter of safety both for the buyer and for the other residents, that each flat should be safe and the building kept in good repair.’

21.3 Had not provided the spreadsheet with the financial plan for the next 5 years, along with other financial information she had requested.

21.4 Did not practise ‘sound financial management’ and she was concerned that leaseholders would be expected to pick up a ‘tremendous bill’ for redecoration and repairs caused by historic neglect.

On 20 May 2020 the landlord provided a response to the resident’s MP’s email of 7 May 2020 about the same matters. It explained that in line with government guidance on tackling the coronavirus, it had only been carrying out essential works and repairs. It was monitoring government guidance and working with its contractors and housing teams with a view to commencing non-essential works at the earliest opportunity.

It recognised that the Section 20 consultation letters issued to residents in April 2020 did not contain any specification or estimated costs, which was an error which it apologised for, and would be re-issuing the letters. It said that it had been working on the planned works programme but was not yet in a position to state how these would be paid for.

The landlord provided its final response on 1 June 2020. In this it apologised for the delay in responding to the resident’s concerns, stating that it was currently working in unprecedented times, which had impacted its service.

It confirmed that under the terms of the lease it was not responsible for inspecting properties. It was a leaseholder’s responsibility to decorate their property every seven years, but while the lease allowed it to enter the property to inspect this was not an obligation, and it would only invoke this clause if it were concerned about the safety of the resident or other leaseholders on the estate. There was no requirement for the landlord to inspect the individual condition of any interior parts of the property and this was a matter to be dealt with between the sellers and purchasers and the solicitors acting on their behalf during the sale of the property.

It apologised for the time taken to carry out repairs, which had been impacted by the pandemic. It confirmed that it would carry out window and door repairs as appropriate with the external decoration. If it found that windows or doors were not repairable, it would replace them.

Regarding the resident’s concerns about the financial information supplied, the landlord said that leaseholders were provided with a financial statement each year, signed off by an external accountant. It acknowledged that ‘Information relating to planned works is currently causing some difficulty, however please be assured that we have been in discussion with property colleagues regarding the planned works programme...Please find enclosed a 30 year spend profile…’

In relation to the resident’s concerns about historic neglect, the landlord explained that in recent years it had entered into long term qualifying agreements which caused some delays with carrying out planned works. It explained that the comment in the stage one response that there was a delay with the mobilisation of this contract related to a delay in agreeing the contract, which then caused delays with the planned works programme. Due to the current coronavirus restrictions, no planned works had been carried out and therefore further delays were being experienced. In addition, the long term qualifying agreement had not progressed and therefore the full Section 20 consultation process was being followed.

In response to the resident’s comments about the surrender clause, the landlord said that the lease stated that the customer surrenders the lease back to the landlord who finds a purchaser and grants the new lease. The lease entitles the landlord to deduct from the sale proceeds a sum as may be required to put the property in good repair, there was no obligation on the landlord to do this. In practice it allowed leaseholders to market and sell their property at a price agreed between them and the purchaser. Any negotiations in relation to the sale price to reflect the condition of the interior of the property was a matter to be dealt with between the vendors and purchasers.

The landlord explained that it was its policy to survey the estate every 5 years, and it last did so in 2018. It said that it was liaising with property colleagues to provide the resident with the information she had requested and apologised for the delay in gathering this. As stated, any repairs needed would be picked up with the external decorations and any windows/doors that could not be repaired would be replaced. As had already been advised, the windows were due for replacement in 2023/24 and the contributions residents were making to the reserve fund should be sufficient to meet the needs of the estate.

The landlord concluded ‘It is fair to say that the external decoration has been delayed, however we do not accept that this is neglectful. The external redecoration was completed in 2009 and on each decoration cycle, repairs are carried out to maintain the property and repair/replace as appropriate.’ As there were no staff members available who would have been involved in historical discussions about the external decorations, it was unable to say why the decision to defer these was made.

Events occurring after the final response

On 8 June 2020 the Section 20 notice of intention to carry out works was re-issued.

On 9 June 2020 the resident responded to the landlord’s final response letter, pointing out that the spend profile that had been referred to as attached to the response was not attached. The Ombudsman understands that this was provided that same day. The resident’s MP also emailed the landlord about these issues that same day.

On 17 June 2020 the landlord responded to the MP, stating it had provided the resident with the spending profile on 9 June 2020. It was unable to provide any further information at that time but could advise that it was working to ensure the section 20 consultation documents were reissued as soon as possible. It said ‘We are currently reviewing the planned works programme across all housing stock to ensure we carry out the works in a co-ordinated way…As soon as a plan is in place to carry out the works, we will reissue the Section 20 consultation documentation and provide the information as per our previous response.’

On 7 August 2020 the landlord wrote to residents to provide an update on the proposed internal and external redecoration works, stating ‘Unfortunately, unforeseen circumstances with our previous framework contractor have meant that we at Anchor Hanover Group have failed to deliver any essential improvement works during the last financial year.’ It said that further delays had been caused by the pandemic, but it was now at Stage 2 of the Section 20 consultation process. It updated again on 16 September 2020 with details of the next steps and consultation process.

On 30 September 2020 the landlord wrote to residents with details of the quotes it had obtained for the works. In this letter it stated that all works would be paid for from the sink fund.

Policy and procedure

The resident’s leasehold agreement states that the landlord will keep in good and substantial repair and repair re-decorate renew amend and clean when and as necessary and appropriate the structure of the building or buildings, including external walls and external wood and woodwork and window frames.

The landlord did not have a cyclical/planned works policy in place at the time the resident raised her concerns. However, its leaseholder handbook states that internal and external redecoration would usually be carried out every 5 years, dependent on the outcome of any inspection.

Assessment and Findings

The Ombudsman has a very specific role in considering whether the landlord has met its obligations to the resident in line with any relevant policies and procedures and taken reasonable steps to resolve the complaint. This Service cannot diagnose repairs; it is not qualified to do so. This means that it cannot determine, for example, what works are required to a property, and will not be able to determine the exact cause of any damage to the windows. Rather, it is the Ombudsman’s role to decide whether the landlord acted reasonably and fairly when responding to the resident’s reports of these problems.

Inspection of property by landlord

In her 9 June 2020 complaint to the Ombudsman, the resident accepts that the lease did not oblige the landlord to inspect the property, but it did state that the leaseholder must ‘keep the interior parts of the demised premises and … cables wires and appurtenances… in good and tenantable repair and condition …’ She states that there is legislation and best practice outside of the lease agreement to make inspection of electrical wiring and general safety within leasehold flats desirable, if not mandatory, and cites the Local Government Association (LGA) publication regarding Fire Safety in Purpose Built Blocks of flats.

The Ombudsman has reviewed the LGA document from 2011 and in particular page 63 and the section quoted by the resident in support of her argument ‘Landlords should plan to have the electrical installations in their flats inspected and tested regularly.’

The Ombudsman notes that this section goes on to say:

‘A number of factors should be taken into consideration when deciding upon the frequency of such inspection, including the duration of the tenancy, the nature of the tenant expected to take possession of the flat. An interval of 10 years between such inspections would be appropriate for flats where a long term tenancy agreement is in place. An interval of five years might be more appropriate for situations where the tenancy is shorter.’

At the start of the document it is stated that the term ‘residents’ is used when referring to all those who live in the building, whether tenants or leaseholders. However, the term ‘tenant’ is used when specifically referring to tenants, but not other forms of resident (such as leaseholders). In light of this, the section that the resident refers to is specifically talking about tenanted flats, not leasehold owner occupied properties, and therefore does not apply here. The Ombudsman has not read through this 200 page document in detail, but review of it found no suggestion that freeholders should carry out regular inspections inside leasehold properties, or were otherwise responsible for fire safety within the demised area.

This Service is unaware of any other legislation or guidance that suggests freeholders undertake regular electrical (or other) inspections of leasehold properties. Shelter specifically states that freeholders don’t have to inspect their properties to check for repairs (although some might choose to do so).[1]

The landlord has provided a clear explanation as to why it does not carry out inspections in both of its responses to the complaint. It has explained that the resident purchased the property at a reduced price to reflect its condition. In light of this, the Ombudsman finds that the landlord has responded appropriately to the concerns raised, and finds no failing here.

Historic neglect

The resident complains that the landlord failed to maintain and paint the external surfaces of the building, which she believes has resulted in issues such as rotten window frames. She feels the landlord should pay for works to remedy such issues, rather than leaseholders.

Many landlords will have a programme of ‘cyclical works’ (various works repeated at regular cycles, such as repair and redecoration of the fabric of the external and common parts of a building), and may assess their housing stock on a regular basis, for example by carrying out stock condition surveys, to inform programmes of planned work and maintain an up-to-date database of the repair/condition of their housing stock. A building/cyclical maintenance policy may be in place to ensure that housing stock is kept fit for use, maximising planned and cyclical maintenance works, and reducing responsive maintenance. Many landlords programme cyclical works around every 5-7 years. In this case, there is no cyclical maintenance policy but the leaseholder handbook suggests that external decorative works, which the leasehold agreement demonstrates the landlord is responsible for, may be carried out approximately every 5 years.

The landlord has not denied that no such works had been carried out to the exterior of the building since 2009, and therefore it seems there has been a much longer period between decorative works than five years. It has explained that as there were no staff available who had been involved in the historical discussions about the external decorations, it was unable to say why the decision to defer these was made. The Ombudsman does not consider this a particularly reasonable explanation: a landlord should keep records of such decisions. It is understandable that the resident was frustrated by this lack of information.

It is not within the scope of this investigation to consider the landlord’s actions (or lack thereof) over the last eleven years or to determine at what point external decoration should have been carried out. However, the Ombudsman has seen communications between the landlord and the resident’s solicitor prior to her purchase of the property in 2019 in which the landlord stated that that external redecoration was planned with a date of April-May 2020 for completion. The Ombudsman has not been provided with a copy of the estate survey from 2018 that is mentioned in the landlord’s correspondence, but it is assumed that this identified works required, hence these planned works for 2020. In light of this, it is understandable that the resident expected these works to have been undertaken, and the fact that they were not represents a failing on the part of the landlord, who was obliged by the terms of the lease to ensure the upkeep of the exterior of the building.

The landlord has accepted in its response to the complaint that there had been various delays with its planned works programme. Its explanations for these delays are somewhat unclear, for example it said they were caused by ‘…changes within the business and the procurement of planned works…’ and ‘the mobilisation of the contract.’ This seems to suggest some difficulties in securing contractors to carry out works, although it is not clear what these difficulties were.

However, the landlord does not accept that it should pay a proportion of the cost of rehabilitating the building. While the Ombudsman is satisfied that there has been a delay in the landlord carrying out the external works, it is not within the scope of the Ombudsman’s investigation to determine to what extent, if any, the delay exacerbated/made necessary repairs, or apportion costs for the works. Therefore, the Ombudsman is unable to conclude that the delay led to the detriment that the resident claims (excess costs). In addition, the evidence shows that the landlord has instigated the Section 20 process, and that all works are to be paid for using the sink fund. This means that there will be no direct cost to the resident for these works.

However, it is clear that the pursuit of this issue, ongoing delays and unclear explanations from the landlord have been time consuming and frustrating for the resident.

Response to requests for financial information

The resident has complained that she requested 5 years forward planning information (income sources and planned spend) but the landlord did not supply this.

The first instance this Service has seen in the information available of this request is the resident’s 7 March 2020 email. There is no indication that the landlord responded to this request.

The resident asked again for this information in her stage 2 complaint dated 7 May 2020. In its 1 June 2020 response the landlord explained that leaseholders were provided with a financial statement each year, signed off by an external accountant. It acknowledged that ‘Information relating to planned works is currently causing some difficulty…’ and explained that its 30 year spend profile was the information it used to calculate the reserve fund annual collection. The landlord provided a 30 year spend profile to the resident.

As with the explanation for the delays in the external works, the landlord’s response here was somewhat unclear. It did not reference the 5 year forward planning information that the resident requested, and instead provided a 30 year spend cycle spreadsheet which does not appear to contain the information that the resident had requested.

It may be that the landlord does not hold this information (as is suggested in its subsequent response to the MP), or that it does not consider it appropriate to release, but either way it would have been better had it provided a clearer response. As above, this resulted in frustration for the resident.

Conclusion

The Ombudsman has not found failings in the landlord’s response to the resident’s concerns about inspection of her property, for which it provided a clear and timely explanation.

However, there has been a significant delay in the external works to the building, and the landlord’s response to this matter was unclear, as was its response to the request for financial information.

Determination (decision)

In accordance with paragraph 54 of the Housing Ombudsman Scheme there was no maladministration in relation to the complaint about property inspections.

In accordance with paragraph 54 of the Housing Ombudsman Scheme there was service failure in relation to the complaint about external works.

In accordance with paragraph 54 of the Housing Ombudsman Scheme there was service failure in relation to the complaint about requests for details on finances

In accordance with paragraph 39(a) of the Housing Ombudsman Scheme the complaint about the boundary wall is outside of jurisdiction.

Orders

The Ombudsman orders the landlord to pay the resident £75 as a remedy to the time and trouble experienced in pursuing her concerns about the external works and requests for financial information.

[1] https://england.shelter.org.uk/housing_advice/shared_ownership_leasehold/responsibility_for_leaseholder_repairsuu